1. (C) Summary: Taiwan's current political climate makes a
breakthrough on the arms procurement issue unlikely in the
very near term, LY President Wang Jin-pyng told the Director
on March 28. However, all parties "will likely agree" to
purchase P-3C anti-submarine aircraft and increase Taiwan's
defense budget to three percent of GDP when the issue is
taken up at some point after PRC President Hu Jintao's April
visit to the U.S. Wang stressed the importance of improving
cross-Strait relations for Taiwan's "economic survival." He
also urged the U.S. to negotiate an FTA with Taiwan. The
Director stressed the importance for Taiwan to improve
inter-party cooperation, especially on defense issues, and he
also noted that the U.S. will be sending a high-level
delegation to Taiwan in May for TIFA discussions. End
Summary.
2. (C) The Director paid an initial call on Legislative Yuan
(LY) President Wang Jin-pyng (Kuomintang) on March 28. The
Director said that the U.S. and others admire Taiwan for its
transition to democracy, and that Taiwan's government should
now focus on increasing efficiency and improving "good
governance" practices. Wang noted that Taiwan has studied
and tried to emulate the United States in building its
democracy.
3. (C) The Director said the U.S. hopes Taiwan's political
parties will work through the distrust which now separates
them, particularly on the issue of Taiwan's self-defense, so
as to preclude China from taking advantage of Taiwan's
internal divisions. The military gap between the PRC and
Taiwan continues to grow, the Director pointed out, and an
overwhelmingly strong China will not be good for cross-Strait
stability as China may be tempted to dictate by threat of
force Taiwan's future direction. The Director added that the
U.S. military believes Taiwan should first and foremost
upgrade its anti-submarine warfare capability by purchasing
the P-3C anti-submarine aircraft.
4. (C) Wang acknowledged that Taiwan must assume greater
responsibility for its own defense and also increase its
inter-operability with American military forces. There has
been progress on arms procurement, Wang asserted, since even
People First Party Chairman James Soong, a former opponent of
any arms purchase, now agrees to consider "reasonable" arms
procurement. It is likely that all parties in the LY will
support increasing the defense budget to three percent of
Taiwan's GDP, but the U.S. should be willing to offer Taiwan
more modern weapons at a reasonable price, Wang said.
Support within the LY is most widespread for the purchase of
the P-3C ASW planes, he added, but the purchase of PAC-III
missiles will have to remain on hold until the three-year ban
imposed by the failed referendum expires in March 2007. Wang
said he understands the importance of keeping Taiwan off the
radar scope during the period before and after PRC President
Hu Jintao's April visit to the United States and therefore
the LY will wait until after Hu returns to China to take up
arms procurement discussions.
5. (C) Although PRC discussions with KMT representatives are
a positive development, the Director noted, the USG has
repeatedly urged the PRC to talk directly with Taiwan's
democratically elected leadership. Wang responded that such
talks are unlikely because President Chen does not accept
China's "one China" precondition and China does not trust
Chen. Wang added that he has been unable to discuss
cross-Strait affairs with President Chen since December 2005,
following the DPP's defeat in local magistrate elections.
The Director responded that there should be communication
between the LY President and President Chen, especially since
the moderate Wang can provide a different and useful
perspective to the President.
6. (C) The Director told Wang that his overarching objective
is to maintain and improve U.S.-Taiwan relations. After
9/11, the primary U.S. focus shifted to fighting global
terrorism, he explained, but the U.S. remains committed to
helping China develop into a peaceful, responsible global
actor, and to preserve the right of Taiwan's democratic
TAIPEI 00001096 002 OF 002
society to decide its own future.
7. (C) Wang suggested that China's continuing economic
development will work to decrease tensions across the Strait,
making military issues gradually less important. Improving
relations with the PRC will help Taiwan's economy survive, he
added. He claimed Taiwan is being "hollowed out" because
Taiwan businesses are forced to move their factories and
know-how to the Mainland in order to remain competitive in
the PRC market. If there were direct shipping and
transportation routes, Taiwan businesses could maintain
manufacturing facilities on both sides of the Strait. In
addition, Wang noted, Beijing currently works to exclude
Taiwan from regional free trade agreements. If Taiwan were
able to improve its relations with China, the PRC might be
willing to let Taiwan participate in such agreements. Wang
also said that Taiwan must develop a new strategy to attract
foreign investment, since it can no longer compete with the
PRC in most manufacturing sectors.
8. (C) Wang stressed the importance to Taiwan of a free
trade agreement (FTA) with the U.S. and asserted that Taiwan
had met the requirements to warrant an FTA. The Director
said the U.S. would be sending a high-level trade delegation
to Taiwan in May under the Trade and Investment Framework
Agreement (TIFA) structure to conduct a comprehensive review
of U.S.-Taiwan trade issues. FTA could be discussed then,
but so would the full range of options to address outstanding
trade problems.
9. (C) Comment: Wang comes across as a moderate willing to
work with the DPP administration, though the track record of
such cooperation in the LY is pretty spotty. Despite an
agreement with his staff to keep this session private, Wang
subsequently briefed the Taiwan media in detail, distorting
the Director's comments on FTA and claiming falsely that we
had encouraged him to serve as a mediator with China on
cross-Strait issues. This all-too-typical experience
underscores the hazards of working within the polarized
internal Taiwan political community.
YOUNG

Raw content

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 001096
SIPDIS
SIPDIS
E.O. 12958: DECL: 03/30/2016
TAGS: PGOV, TW
SUBJECT: DIRECTOR'S INTRODUCTORY CALL ON LEGISLATIVE YUAN
PRESIDENT WANG JIN-PYNG, MARCH 28, 2006
Classified By: AIT Director Stephen M. Young. Reason(s): 1.4 (B/D).
1. (C) Summary: Taiwan's current political climate makes a
breakthrough on the arms procurement issue unlikely in the
very near term, LY President Wang Jin-pyng told the Director
on March 28. However, all parties "will likely agree" to
purchase P-3C anti-submarine aircraft and increase Taiwan's
defense budget to three percent of GDP when the issue is
taken up at some point after PRC President Hu Jintao's April
visit to the U.S. Wang stressed the importance of improving
cross-Strait relations for Taiwan's "economic survival." He
also urged the U.S. to negotiate an FTA with Taiwan. The
Director stressed the importance for Taiwan to improve
inter-party cooperation, especially on defense issues, and he
also noted that the U.S. will be sending a high-level
delegation to Taiwan in May for TIFA discussions. End
Summary.
2. (C) The Director paid an initial call on Legislative Yuan
(LY) President Wang Jin-pyng (Kuomintang) on March 28. The
Director said that the U.S. and others admire Taiwan for its
transition to democracy, and that Taiwan's government should
now focus on increasing efficiency and improving "good
governance" practices. Wang noted that Taiwan has studied
and tried to emulate the United States in building its
democracy.
3. (C) The Director said the U.S. hopes Taiwan's political
parties will work through the distrust which now separates
them, particularly on the issue of Taiwan's self-defense, so
as to preclude China from taking advantage of Taiwan's
internal divisions. The military gap between the PRC and
Taiwan continues to grow, the Director pointed out, and an
overwhelmingly strong China will not be good for cross-Strait
stability as China may be tempted to dictate by threat of
force Taiwan's future direction. The Director added that the
U.S. military believes Taiwan should first and foremost
upgrade its anti-submarine warfare capability by purchasing
the P-3C anti-submarine aircraft.
4. (C) Wang acknowledged that Taiwan must assume greater
responsibility for its own defense and also increase its
inter-operability with American military forces. There has
been progress on arms procurement, Wang asserted, since even
People First Party Chairman James Soong, a former opponent of
any arms purchase, now agrees to consider "reasonable" arms
procurement. It is likely that all parties in the LY will
support increasing the defense budget to three percent of
Taiwan's GDP, but the U.S. should be willing to offer Taiwan
more modern weapons at a reasonable price, Wang said.
Support within the LY is most widespread for the purchase of
the P-3C ASW planes, he added, but the purchase of PAC-III
missiles will have to remain on hold until the three-year ban
imposed by the failed referendum expires in March 2007. Wang
said he understands the importance of keeping Taiwan off the
radar scope during the period before and after PRC President
Hu Jintao's April visit to the United States and therefore
the LY will wait until after Hu returns to China to take up
arms procurement discussions.
5. (C) Although PRC discussions with KMT representatives are
a positive development, the Director noted, the USG has
repeatedly urged the PRC to talk directly with Taiwan's
democratically elected leadership. Wang responded that such
talks are unlikely because President Chen does not accept
China's "one China" precondition and China does not trust
Chen. Wang added that he has been unable to discuss
cross-Strait affairs with President Chen since December 2005,
following the DPP's defeat in local magistrate elections.
The Director responded that there should be communication
between the LY President and President Chen, especially since
the moderate Wang can provide a different and useful
perspective to the President.
6. (C) The Director told Wang that his overarching objective
is to maintain and improve U.S.-Taiwan relations. After
9/11, the primary U.S. focus shifted to fighting global
terrorism, he explained, but the U.S. remains committed to
helping China develop into a peaceful, responsible global
actor, and to preserve the right of Taiwan's democratic
TAIPEI 00001096 002 OF 002
society to decide its own future.
7. (C) Wang suggested that China's continuing economic
development will work to decrease tensions across the Strait,
making military issues gradually less important. Improving
relations with the PRC will help Taiwan's economy survive, he
added. He claimed Taiwan is being "hollowed out" because
Taiwan businesses are forced to move their factories and
know-how to the Mainland in order to remain competitive in
the PRC market. If there were direct shipping and
transportation routes, Taiwan businesses could maintain
manufacturing facilities on both sides of the Strait. In
addition, Wang noted, Beijing currently works to exclude
Taiwan from regional free trade agreements. If Taiwan were
able to improve its relations with China, the PRC might be
willing to let Taiwan participate in such agreements. Wang
also said that Taiwan must develop a new strategy to attract
foreign investment, since it can no longer compete with the
PRC in most manufacturing sectors.
8. (C) Wang stressed the importance to Taiwan of a free
trade agreement (FTA) with the U.S. and asserted that Taiwan
had met the requirements to warrant an FTA. The Director
said the U.S. would be sending a high-level trade delegation
to Taiwan in May under the Trade and Investment Framework
Agreement (TIFA) structure to conduct a comprehensive review
of U.S.-Taiwan trade issues. FTA could be discussed then,
but so would the full range of options to address outstanding
trade problems.
9. (C) Comment: Wang comes across as a moderate willing to
work with the DPP administration, though the track record of
such cooperation in the LY is pretty spotty. Despite an
agreement with his staff to keep this session private, Wang
subsequently briefed the Taiwan media in detail, distorting
the Director's comments on FTA and claiming falsely that we
had encouraged him to serve as a mediator with China on
cross-Strait issues. This all-too-typical experience
underscores the hazards of working within the polarized
internal Taiwan political community.
YOUNG